Department of Justice

U.S. Attorney’s Office

Southern District of Texas

---

FOR IMMEDIATE RELEASE

Thursday, September 15, 2016

Accountant Convicted of Embezzling More than $3 Million from Houston Company

HOUSTON – An accountant from Georgia has admitted he committed wire fraud and stole more than $3 million from Houston company Airis International Holdings, announced U.S. Attorney Kenneth Magidson.

Daniel Nathan West, 50, of Duluth, Georgia, was previously employed as the treasurer and chief financial officer for Airis International Holdings. In this role, he was to manage Airis finances during construction projects, control the company’s monetary assets, administer payments and payroll, among other things.

In 2005, West resigned from Airis to start his accounting firm - Westtree Financial.  Shortly thereafter, Airis contracted with Westtree Financial to provide accounting services to Airis. Although West no longer worked directly for Airis, through his company he continued to have signature authority on Airis’ bank accounts and authority to transfer funds on behalf of Airis. 

From 2005 to 2012, West embezzled $3,616,563.45 from Airis, admitting he used the monies to purchase a luxury home in Georgia, a beach house in Florida, an office building in Georgia and luxury vehicles.

U.S. District Judge Kenneth Hoyt accepted the plea and set sentencing for Dec. 5, 2016. At that time, he faces up to 20 years in prison. He was permitted to remain on bond pending that hearing.

The FBI conducted the investigation. Assistant U.S. Attorney Vernon Lewis is prosecuting the case.

Department of Justice

U.S. Attorney’s Office

Northern District of California

---

FOR IMMEDIATE RELEASE

Thursday, September 15, 2016

Former Securities Lawyer Pleads Guilty To Securites Fraud

Disbarred Marin attorney admits he defrauded investors of more than $2.5 million

SAN JOSE – James Seltzer, a former attorney and resident of Marin County, pleaded guilty to securities fraud, announced United States Attorney Brian Stretch, FBI Special Agent in Charge John F. Bennett, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.  The guilty plea was accepted yesterday by U.S. District Judge Lucy H. Koh.

According to the plea agreement, beginning no later than October of 2007 through at least May of 2011, Seltzer, 67, formerly of Belvedere, defrauded and deceived multiple individuals in connection with the purchase and sale of securities.  Seltzer admitted he misrepresented to the investors that he would use their money to make certain investments for their exclusive benefit but instead diverted the funds to other uses.  Seltzer acknowledged that in many cases, he diverted all or virtually all of the monies he had obtained from his investors and spent the monies on his own personal and business expenses after depositing the funds into his own personal bank accounts.  Seltzer further admitted that he had more than ten victims resulting in losses of more than $2,500,000.

Seltzer was indicted by a federal grand jury on June 18, 2015.  He was charged with five counts of securities fraud, in violation of 15 U.S.C. § 78; one count of mail fraud, in violation of 18 U.S.C. § 1341; and three counts of money laundering, in violation of 18 U.S.C. § 1957. Pursuant to the plea agreement, Seltzer admitted his guilt to one count of securities fraud and the remaining counts were dismissed.  After being apprehended in Hawaii in September 2015, Seltzer was ordered to appear in San Jose to face the charges presented in the indictment. 

The maximum term of imprisonment for securities fraud is 20 years.  Additional periods of supervised release, fines, and special assessments also could be imposed.    Any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  Seltzer remains free on a bond and is scheduled to appear before Judge Koh on February 15, 2017, for sentencing.  

Assistant U.S. Attorneys Timothy Lucey and Arvon Perteet are prosecuting the case with the assistance of Laurie Worthen.  The prosecution is the result of an investigation by the IRS-Criminal Investigation and the Federal Bureau of Investigation.

Department of Justice

U.S. Attorney’s Office

Middle District of Florida

---

FOR IMMEDIATE RELEASE

Tuesday, September 13, 2016

Cape Coral Woman Sentenced To Three Years In Prison For Defrauding Her Former Company Of $1.1 Million

Fort Myers, Florida – U.S. District Judge Sheri Polster Chappell has sentenced Junipher Sayers, formerly Junipher Layne, (34, Cape Coral) to three years in federal prison for wire fraud. The Court also ordered her to repay $1,132,160.91 in restitution to the victim, Tigrent, Inc., and an additional $1,132,160.91 to the United States in forfeiture, representing the proceeds she obtained as a result of the offenses.  

According to the plea agreement, between January 28, 2013, and June 2015, Sayers devised and carried out a sophisticated scheme to defraud Tigrent, Inc. Sayers, formerly an accounts payable clerk, stole money from the company by submitting and processing fraudulent invoices for payment. Sayers then directed those payments to several shell companies that she had created and controlled for the purpose of carrying out her scheme. She spent large amounts of the stolen money on consumer goods and other items.

This case was investigated by the Federal Bureau of Investigation and the Cape Coral Police Department. It was prosecuted by Assistant United States Attorney Charles D. Schmitz.

Department of Justice

U.S. Attorney’s Office

Northern District of Iowa

---

FOR IMMEDIATE RELEASE

Tuesday, September 13, 2016

Mason City Dental Office Manager Pleads Guilty to Stealing Nearly $500,000 from Two Dentists

An office manager of a small dental practice in Mason City, Iowa who stole nearly $500,000 from her employer over the course of almost a decade pled guilty today in federal court in Cedar Rapids.

Pamela Harris f/k/a “Pamela Mahoney,” 58, from Mason City, Iowa, was convicted of Wire Fraud.  In a plea agreement, Harris admitted she was a trusted employee of the dental practice for approximately 21 years, from about 1993 until 2014.  During such time, she had sole responsibility for the practice’s day-to-day finances.  She was fired in 2014 after her fraud was discovered.

The two dentists that formed the practice authorized the creation of rubber stamps bearing their signatures to pay for legitimate expenses.  However, the dentists always required Harris to obtain authorization before using the rubber stamps on a check to pay a bill.  At no time did the dentists authorize Harris to create checks and use their rubber signature stamps to pay for her personal expenses without their knowledge.

Beginning no later than July 2005, and continuing through about May 2014, Harris devised and executed a scheme to defraud the dentists and their practice.  She used the dentists’ rubber signature stamps without their authorization to create forged checks drawn on the practice’s bank account.  By means of these forged checks, Harris caused the practice’s bank to make electronic funds transfers by wire directly into her bank account or into the accounts of third parties, including credit card companies, to pay for personal expenses that she or her dependents had incurred.  It was also part of Harris’s scheme to maintain and use various credit card accounts in the name of the dental practice to pay for personal expenses without the authorization of the dentists.  From time to time, Harris attempted to disguise the illegitimate payments by causing checks to be drawn close in time and in amounts identical to the legitimate rent expenses of the LLC.

Harris admitted that, in May 2012, she forged a check bearing the signatures of the dentists to pay for a $4,000 white plastic fence at her home.  In total, Harris admitted to stealing at least $474,915.54 from the dentists and their practice.  Her actions caused the dentists such substantial financial hardship that they needed to take out multiple lines of credit at local financial institutions to keep their dental practice in business.  Harris has agreed to make full restitution to her victims, as well as forfeit and abandon the proceeds of her crime.

Sentencing before United States District Court Chief Judge Linda R. Reade will be set after a presentence report is prepared.  Harris remains free on certain conditions of release pending sentencing.  Harris faces a possible maximum sentence of 20 years’ imprisonment without the possibility of parole, a maximum fine of twice gross gain or gross loss resulting from the offense, or $250,000, whichever is greater, a $100 in special assessment, and not more than three years of supervised release following any imprisonment.

The case is being prosecuted by Assistant United States Attorney Tim Vavricek and was investigated by the Federal Bureau of Investigation and the Mason City Police Department. 

Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.

Department of Justice

U.S. Attorney’s Office

Southern District of Mississippi

---

FOR IMMEDIATE RELEASE

Tuesday, September 13, 2016

Hattiesburg Businessman Found Guilty of Fraud Relating to Government Housing Contract

Hattiesburg, Miss – On Monday, September 12, 2016, a federal jury found Kenneth Fairley, 62, of Hattiesburg, guilty of carrying out a scheme to defraud the U.S. Department of Housing and Urban Development (HUD), announced U.S. Attorney Gregory K. Davis. The guilty verdict came after a six day trial in Hattiesburg before U.S. District Judge Keith Starrett.

Fairley was found guilty of one count of conspiracy to defraud the United States and two counts of theft of government money. He will be sentenced on November 21, 2016 and faces a maximum penalty of 25 years in prison and $750,000 fine.

Fairley and his co-conspirator, Artie Fletcher, devised a scheme to defraud HUD in connection with a government contract issued to the City of Hattiesburg for the rehabilitation of two residential properties located within the city limits. The project was supported by federal funding and was executed through sub-contracted work to be completed by Pinebelt Community Services, a local non-profit operated by Fairley. Fairley conspired with co-conspirator Fletcher to fraudulently perform the work for a lesser amount than represented on the HUD contract, with the difference in the bid and actual costs being transferred to Fairley, through Fletcher, for purposes not intended by the government contract.

Artie Fletcher previously pled guilty to a Criminal Information charging him with misprision of a felony. He will be sentenced on December 19, 2016, and faces a maximum penalty of three years in prison and a $250,000 fine.

This case was investigated by the U.S. Department of Housing and Urban Development, IRS – Criminal Investigation, Federal Bureau of Investigation, and the Mississippi State Auditor’s Office. It was prosecuted by Assistant U.S. Attorneys Jay Golden and Abe McGlothin.

Department of Justice

U.S. Attorney’s Office

Southern District of Florida

---

FOR IMMEDIATE RELEASE

Monday, September 12, 2016

Former Carlisle CEO and Consultant Pleads Guilty in Fraud Scheme Involving Low-Income Housing Developments

Seventh and Final Defendant Pled Guilty to Participating in a $36 Million Fraud Scheme Involving Fourteen Low-Income Housing Developments

The last of seven defendants pled guilty today to participating in a scheme to defraud the United States government of $36 million in funding intended for the construction of low-income housing developments.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, Nadine Gurley, Special Agent in Charge, U.S. Department of Housing and Urban Development, Office of Inspector General (HUD-OIG), and Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), made the announcement.

“The defendant and his co-conspirators stole $36 million dollars in federal monies that would otherwise have been used to provide affordable housing to hundreds of needy residents throughout the State of Florida,” stated U.S. Attorney Ferrer.  “As a result of a steadfast commitment to justice, forged between the U.S. Attorney’s Office and our law enforcement partners, to date we have recovered over $20 million of these stolen funds and will continue to prosecute those who compromise a public service program designed to aid the poor, elderly and homeless.”

“Stealing money from the federal government is not a victimless crime.  In this case, 36 million in taxpayer dollars intended for low-income housing developments never reached the needy but instead lined the pockets of Lloyd Boggio and his co-conspirators,” said William J. Maddalena, Assistant Special Agent in Charge, FBI Miami.  “The FBI is committed to rooting out this type of fraud and reclaiming money that was dishonestly obtained.”

“These defendants took advantage of a tax credit intended to help Florida residents in need of affordable housing,” stated Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI). “IRS-CI will continue to commit resources to hold individuals accountable who create false tax returns in order to steal from the government.”

Lloyd Boggio, 70, of Coconut Grove, pled guilty before U.S. District Judge Ursula Ungaro to one count of money laundering, in violation of Title 18, United States Code, Section 1957.  Boggio is scheduled to be sentenced on December 9, 2016 at 1:30 p.m. before United States Ursula Ungaro.  As part of the plea agreement, Boggio agreed to forfeit to the United States approximately $2 million in seven frozen bank accounts. In addition, Boggio agreed to forfeit a multi-million dollar luxury home in Coconut Grove and to the entry of a forfeiture money judgment of $7,174,357.  The defendant faces a maximum statutory sentence of 10 years’ imprisonment.

In addition to Boggio, the following individuals were charged criminally and previously pled guilty for their participation in these and other fraudulent schemes to steal funds intended for the construction of low-incomes housing.  These individuals are: 

• Matthew Greer, 38 of Miami Beach, a former CEO of Carlisle Development Group (“CDG”), a former low-income housing developer in Miami, Florida;
• Michael Runyan, 67 of Lighthouse Point, the CEO of BJ&K Construction, Inc. (“BJ&K Construction”), a general contractor in Fort Lauderdale, Florida;
• Gonzalo DeRamon, 52 of Coral Gables, a co-founder of Biscayne Housing Group (“BHG”), a former low-income housing developer in Miami, Florida;
• Michael Cox, 48 of Miami, a co-founder of BHG;
• Rene Sierra, 58 of Southwest Ranches, a founder of Siltek Affordable Housing LLC, a former general contractor in Planation; and
• Arturo Hevia, 64 of Miramar, a founder of Design Management and Builders Construction, a general contractor in Doral.

According to court records, including the agreed upon factual proffers in support of the defendants’ pleas, from 2006 to 2012, Boggio and Greer served, at alternating times, as the Chief Executive Officer of CDG.  During this period, CDG applied for federal tax credits and federal grant monies to build low-income housing developments through a program administered by the Florida Housing Finance Corporation (“FHFC”).  To obtain these federal funds, FHFC required developers to submit proposed development costs, including a construction contract signed by the developer and contractor. 

The court record, including the defendants’ factual proffers, indicates that Boggio and Greer, of CDG, conspired with Runyan of BJ&K Construction to unjustly enrich themselves by submitting fraudulently inflated low-income housing construction contracts to FHFC’s representatives in order to obtain excess federal tax credits and grant monies to which they were not entitled, and then to use the proceeds for their personal use and benefit.  Boggio, Greer, and Runyan caused the submission of fraudulently inflated construction contracts on at least eight different low-income housing developments, which resulted in the allocation of at least $26 million in excess federal tax credits and grant monies. With these excess federal funds, Runyan made kickback payments for the benefit of Boggio and Greer, including an $8.7 million wire transfer to Boggio’s bank account in the name of Caesar and Cleopatra on March 23, 2011. 

According to the factual proffers, Boggio and Greer also conspired with Cox and DeRamon of BHG to steal government money intended to build low-income housing developments.  BHG employed the same contract inflation scheme of submitting fraudulently inflated contracts to FHFC for the receipt of excess federal tax credits and grant monies on two low-income housing developments jointly developed by CDG and BHG.  In or around May 2010, Boggio and Greer agreed with Cox and DeRamon to share approximately $3.7 million in excess government funds for these two joint venture developments. 

Court documents further indicate that as a result of the defendants’ fraudulent schemes to inflate low-income housing construction contracts, FHFC allocated more than $36 million in excess tax credits and grant monies for fourteen low-income housing developments.  Both during and after construction of the developments, the contractors made periodic kickback payments of the fraudulent contract inflation monies for the benefit of the CDG and BHG principals, including more than $26 million in kickbacks from Runyan for the benefit of Greer and Boggio; more than $6.2 million in kickbacks from Sierra for the benefit of DeRamon, Cox, Greer, and Boggio; and more than $1 million in kickbacks from Hevia for the benefit of DeRamon and Cox.     

During the course of this investigation, through seizure warrants and voluntary payments by the defendants, the United States has collected over $20 million in proceeds connected to the thefts of government funds.  

Mr. Ferrer thanked the FBI, HUD-OIG, and IRS-CI for their work on this case.  This and all related cases are being prosecuted by Assistant U.S. Attorneys Michael R. Sherwin, Michael N. Berger, Karen Rochlin, Evelyn Sheehan, and Eloisa Fernandez.  

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Department of Justice

U.S. Attorney’s Office

Middle District of Louisiana

---

FOR IMMEDIATE RELEASE

Monday, September 12, 2016

Baton Rouge Resident Convicted Of Fraudulent Scheme Throughout 2012 And 2013

BATON ROUGE, LA - United States Attorney Walt Green of the Middle District of Louisiana announced that RAPHEW T. REED, JR., age 31, of Baton Rouge, Louisiana, has been convicted of false representation of a Social Security number, in violation of Title 42, United States Code, Section 408(a)(7)(B), and wire fraud, in violation of Title 18, United States Code, Section 1343, in connection of a fraudulent scheme he executed throughout 2012 and 2013 in the Baton Rouge area and elsewhere.  REED entered his guilty pleas before Judge John W. deGravelles and is now awaiting sentencing.  REED faces significant incarceration, fines, restitution, and supervised release following imprisonment, as well as the forfeiture of the proceeds of his criminal activity.

REED was a resident of Baton Rouge, Louisiana, who held himself out as a financial advisor and as someone who could assist individuals and businesses in obtaining credit and financing.  However, during his guilty plea hearing, REED admitted that, in May of 2012, he knowingly made false statements to a federally-insured credit union in an attempt to obtain a loan.  REED provided the credit union with a false Social Security number and documents that misrepresented his identity, income, and credit score.  When that scheme failed, from late 2012 through April 2013, REED executed a scheme to defraud another company, which, on November 27, 2012, wired $125,000 to REED.  REED fraudulently diverted the funds to his friends, family members, others to whom he owed money, and to another one of his own bank accounts.  When the victim repeatedly asked REED to return the funds, as he had promised he would do,REED falsely represented to the victim that he was in the process of returning the company’s funds. REED knew that he did not have the funds but continued to make false statements to the victim through April of 2013.

U.S. Attorney Green stated: “Con artists undermine the financial security of our community and often leave many victims in their wake.  We will continue to vigilantly pursue such criminals with the resources necessary to bring them to justice.”

This ongoing matter is being investigated by the Baton Rouge office of the Federal Bureau of Investigation, with valuable assistance from the Social Security Administration’s Office of Inspector General.  The matter is being prosecuted by Assistant United States Attorney Alan A. Stevens, who serves as a deputy chief within the office’s Criminal Division.

Department of Justice

U.S. Attorney’s Office

Eastern District of Pennsylvania

---

FOR IMMEDIATE RELEASE

Monday, September 12, 2016

Former Manager At QVC Pleads Guilty To Wire Fraud, Mail Fraud And Money Laundering

PHILADELPHIA- Douglas Rae, 59, plead guilty today to wire fraud, mail fraud and money laundering for defrauding his employer, QVC, a television based retail company, announced United States Attorney Zane David Memeger.

Rae, while employed as a manager in the Lighting Department at QVC, concocted multiple schemes to falsely invoice his employer of approximately $1.8 million.

Rae faces a statutory maximum of 130 years’ imprisonment, a fine of $1.75 million, supervised release and a $700 special assessment.  The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Denise S. Wolf

Department of Justice

U.S. Attorney’s Office

Northern District of Oklahoma

---

FOR IMMEDIATE RELEASE

Monday, September 12, 2016

Accountant Sentenced to 36 Months in Prison and Ordered to Pay $2.5 Million in Restitution For Filing False Tax Return

TULSA, OKLA.— Nelson Wade Cagle, 32, of Owasso, was sentenced today to serve 36 months in federal prison for filing a false income tax return in 2013, announced United States Attorney Danny C. Williams Sr. of the Northern District of Oklahoma. In addition to the prison incarceration, United States District Court Chief Judge Gregory K. Frizzell ordered Cagle to pay restitution in the approximate amount of $2 million to CEI Petroleum, LLC, owned by ORCA/CEI Petroleum, and approximately $600,000 to the Internal Revenue Service.

Cagle was charged by Information in April 2016, and pleaded guilty in June 2016.

According to court documents, Cagle admitted that he failed to report the monies and funds that he fraudulently diverted from ORCA/CEI Petroleum, a local petroleum/energy corporation, as income on his 2013 federal tax return. His embezzlement and failure to report it on his income tax return also resulted in his owing the Internal Revenue Service more than $597,000.

The case was a joint investigation by the Internal Revenue Service-Criminal Investigations and the Federal Bureau of Investigation. Assistant United States Attorney Trent Shores prosecuted the case.

###

Department of Justice

U.S. Attorney’s Office

District of Massachusetts

---

FOR IMMEDIATE RELEASE

Thursday, January 14, 2016

Sharon Men Indicted for Tobacco Tax Fraud and Money Laundering

BOSTON – Two Sharon men were charged today in U.S. District Court in Boston in connection with illegally selling tobacco products and laundering the proceeds.

Muhammad Saleem Iqbal, 53, and Kaleem Ahmad, 47, were indicted on one count of wholesale tobacco tax fraud and one count of money laundering conspiracy.

The indictment alleges that Iqbal and a business partner operated a wholesale business under the name “Pick N Dip,” in Norwood that sold tobacco products, including cigars and smokeless tobacco (such as snuff and chewing tobacco), as well as other non-tobacco items, to convenience stores, gas stations and other retail businesses.  Under state law, smokeless tobacco wholesalers must file an excise tax form monthly and pay a 210% excise tax on smokeless tobacco brought into Massachusetts.  Cigar wholesalers must file an excise tax form quarterly and must pay a 40% excise tax on cigars brought into Massachusetts

It is alleged that in order to evade tobacco taxes, beginning around 2010, Iqbal, Ahmad and business partner repeatedly purchased tens of thousands of dollars at a time worth of smokeless tobacco and cigars in Pennsylvania where no taxes are imposed for these tobacco products.   They then arranged to have these tobacco products covertly transported to Massachusetts for resale, without filing the records required by Massachusetts state law and federal law, and without paying excise taxes.

Ahmad and others are alleged to have repeatedly engaged in large cash transactions in order to conceal and disguise the nature, location, source, ownership and control of the proceeds of their illegal tobacco business and to avoid transaction reporting requirements under federal and state law.  The indictment alleges that Ahmad and others transported more than $50,000 in cash at a time from Massachusetts to Pennsylvania where the money was used to purchase additional untaxed smokeless tobacco and cigars.

The charges of wholesale tobacco tax fraud and money laundering conspirary each provide for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000.  Actual sentences for federal crimes are typically less than the maximum penalties.  Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors. 

United States Attorney Carmen M. Ortiz; William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston; and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today.  The case is being prosecuted by Assistant U.S. Attorney Stephen P. Heymann of Ortiz’s Economic Crimes Unit.

The details contained in the Indictment are allegations.  The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Department of Justice

U.S. Attorney’s Office

District of Maryland

---

FOR IMMEDIATE RELEASE

Monday, January 11, 2016

Payroll Service Company Owner Admits to Stealing Money Set Aside by Clients to Pay Federal and State Taxes

Government Contends that the Scheme Resulted in Losses to the IRS, Maryland Comptroller, and Individual AccuPay Clients of Approximately $2.6 Million

Baltimore, Maryland – Kevin Carden, age 55, formerly of Bel Air, Maryland, pleaded guilty today to wire fraud and to filing a false tax return, arising from a scheme to steal money from his clients and the IRS.  The guilty plea was entered just before Carden’s trial was scheduled to begin.

The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Thomas Jankowski of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office; and Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation.

“When customers realized that the money they entrusted to AccuPay was not being used as intended to pay their taxes, Kevin Carden misled them with false cover stories,” said U.S. Attorney Rod J. Rosenstein. “What really happened was that Kevin and Beverly Carden took money intended for the IRS and spent it themselves, causing millions of dollars in losses to their customers.”

According to his plea agreement, until its closure in March 2013, Kevin Carden and his wife, Beverly Carden operated AccuPay, Inc. which provided payroll and payroll tax services to small and medium businesses.  Kevin Carden ran the company’s “tax department,” which was responsible for handling the employment tax portion of the business.  AccuPay received funds from its clients that it held in trust to pay over to the IRS and the Comptroller of Maryland for AccuPay’s clients’ employment taxes. Kevin Carden was responsible for transferring the client funds to make the required tax payments.   

During the course of the fraud scheme, which Kevin Carden admitted lasted from 2010 to March 2013, AccuPay withdrew from the clients’ funds the full amount of payroll taxes owed, but then paid the taxing authorities only a portion of the funds.  While AccuPay falsely represented to its clients that it paid all of the taxes owed, in fact, Beverly Carden diverted some of those funds to a joint personal bank account that she and her husband maintained which the couple then used to pay personal expenses. 

Because of the Cardens’ failure to fully pay existing tax obligations owed by their clients, both the federal and state taxing authorities imposed interest and penalties on AccuPay’s clients, thereby further increasing the magnitude of their tax obligations. Thus, the payments that the Cardens did make to the taxing authorities in part were being applied to pay interest charges and penalties imposed as a result of underpayments earlier in the scheme.

The Cardens used various methods to cover up their diversion of funds and to allay their clients’ concerns when they learned that the taxing authorities had apparently not been paid the full amounts they were supposed to receive. For example, in the instances in which AccuPay’s clients confronted employees at AccuPay about the underpayment of their taxes, Kevin Carden either told those clients that the underpayment would be addressed or (in some cases) avoided their inquiries. Kevin Carden further represented to those clients with whom he spoke that the underpayment was due to (1) a mistake by the taxing authority; (2) an error made by AccuPay employees; and/or (3) problems with the software AccuPay used to file tax returns. These representations were often untrue.

In addition, as a further means of covering up their diversion of funds and allaying their clients’ concerns, in late 2011 AccuPay sent a letter to their clients stating that they had hired a Chief Financial Officer (CFO) to audit all tax deposits and filings for all tax clients back to 2009 “for correctness, compliance, and completeness.” In fact, that individual was not AccuPay’s CFO, but rather was an independent tax preparer the Cardens had hired to prepare their own personal taxes and the corporate taxes of AccuPay, rather than those of the clients. 

In 2012, a client of AccuPay confronted representatives of AccuPay with the fact that the company had failed to pay over $300,000 in taxes owed from 2008 to 2012.  In response, AccuPay paid the client’s tax deficiencies.

Kevin Carden admits that the amount of loss arising from this scheme is at least $250,000, but the government will argue that the loss amount is approximately $2.6 million.

Carden also admits that he filed a false individual tax return for 2011 in which he did not report the amount of payroll taxes that had been diverted from AccuPay’s clients to the Cardens’ personal account.  Kevin Carden admits that the amount of loss arising from the false tax return offense is between $40,000 and $100,000, but the government will argue that the loss amount is approximately $144,720.

As part of his plea agreement, Kevin Carden will be ordered to pay restitution in the full amount of the victims’ losses, including both the IRS and the individual clients of AccuPay.

Kevin Carden faces a maximum penalty of 20 years in prison for wire fraud, and a maximum of three years in prison for filing a false tax return.  U.S. District Judge Marvin J. Garbis scheduled sentencing for May 18, 2016, at 10:00 a.m.

Beverly Carden, age 53, formerly of Bel Air, Maryland, previously pleaded guilty to mail fraud and filing a false tax return, and is also scheduled to be sentenced on May 18, 2016, at 10:00 a.m.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visitwww.stopfraud.gov.

United States Attorney Rod J. Rosenstein commended the IRS - Criminal Investigation and FBI for their work in the investigation.  Mr. Rosenstein praised the Bel Air Police Department for their assistance in the investigation, and thanked Assistant U.S. Attorneys Evan T. Shea and Jefferson M. Gray, who are prosecuting the case.

Department of Justice

U.S. Attorney’s Office

Northern District of Texas

---

FOR IMMEDIATE RELEASE

Tuesday, January 5, 2016

Search Engine Optimizer Sentenced to More than Three Years in Federal Prison for Extorting Money from a Local Merger and Acquisitions Firm

Defendant Threatened to Inflict Economic Harm

DALLAS, Texas — William Stanley, 53, a/k/a “William Laurence,” “Bill Stanley,” “William Davis,” “William Harris,” and “William L. Stanley,” was sentenced yesterday by U.S. District Judge David C. Godbey to 37 months in federal prison for attempting to extort money from a business in Dallas, announced U.S. Attorney John Parker of the Northern District of Texas.  The court also ordered Stanley to pay $174,888 in restitution to a dozen identified victims of Stanley’s extortive conduct, including the Dallas-based firm, GE.

Stanley and his sister, Lynn Faust, a/k/a “Lynn Michaels,” were indicted in 2014, and Stanley pleaded guilty last month to one count of Hobbs Act – Extortion.  Faust, 55, who was arrested in Sweden in May 2014, pleaded guilty in July 2015 to a Superseding Information charging one count of receiving the proceeds of extortion and aiding and abetting.  She faces a maximum statutory penalty of three years in federal prison and a $250,000 fine.  Her sentencing is set for February 1, 2016, before Judge Godbey.

Stanley, although a U.S. citizen, most recently resided in Romania with his wife, a Romanian national.  In 2013, he traveled several times between Europe and the United States.  On March 3, 2014, he was arrested on a related federal criminal complaint at George Bush Intercontinental Airport in Houston, where he arrived on a flight from Europe.  He has been in custody since that time.

Faust assisted Stanley in operating his search engine optimization (SEO) company.  A legitimate SEO business engages in standard practices such as optimizing the underlying HTML code on a website for certain keywords that a search engine indexer, (e.g., a web crawler for Google, Bing, etc.) would associate with a given search query.  An illegitimate SEO business engages in deceptive tactics to affect search engine rankings and the volume of results.  Such deceptive tactics include creating fraudulent reviews (good or bad), creating fictitious websites, or hiding text on websites.

While Stanley engaged in some legitimate SEO work, he also engaged in illegitimate and illegal SEO activities.  Stanley also extorted individuals and companies by threatening to engage in the illegitimate SEO work, that being posting fraudulent comments and creating negative reviews online, if the victim did not pay him a certain sum of money.

In November 2009, GE entered into a contract with Stanley for SEO services and reputation management.  Stanley was hired because of his ability to improve a firm’s online reputation through search results.  After approximately one year, however, GE sought to terminate its relationship with Stanley after it determined he had acted outside of his contracted duties.  Stanley also created websites that had the ability to damage GE’s reputation by associating GE with a scam.  Stanley demanded additional payments to end his contractual relationship with GE and to surrender the administrator rights to the websites to GE.  From November 2010 through January 2011, GE paid Stanley a total of $80,000 to terminate the relationship.

Posing as “William Davis” and “William Laurence,” Stanley transmitted threatening communications, via email and telephone, from foreign countries to GE in the Northern District of Texas.  Those communications threatened to post comments on the Internet wrongfully disparaging GE’s reputation, if GE did not send money to Stanley.

Because of Stanley’s threats to harm GE’s reputation through negative Internet posts that would adversely affect GE’s ability to conduct business if it failed to send money, GE responded to the wrongful inducement by sending four payments totaling $29,556 by MoneyGram to Stanley in Brasov, Romania. 

According to the factual resume, the government could readily prove that Stanley’s extortive conduct caused GE to make the above payments and to lose revenue. The extortive conduct also affected interstate commerce.  In addition, the government contended that it could readily prove that Stanley engaged in similar extortionate conduct with approximately 40 to 45 victims (including GE). 

The FBI investigated the case and Assistant U.S. Attorney C.S. Heath prosecuted.

# # #